Rs 410 Puts Draw Over 3,600 Contracts on National Aluminium Company Ltd as Stock Climbs Above Key Moving Averages

Put Options Event and Cash Market Context

On 12 August 2026, National Aluminium Company Ltd witnessed significant put option activity ahead of the 25 August expiry. The Rs 410 strike put led the volume with 3,629 contracts traded, closely followed by Rs 400 (4,463 contracts), Rs 420 (3,322 contracts), and Rs 390 (4,198 contracts). The underlying stock price stood at Rs 419.45, reflecting a strong intraday gain of 7.01% and a three-day rally totalling 9.84%. The turnover for these put strikes ranged from ₹224.3 lakhs at Rs 390 to ₹834 lakhs at Rs 420, indicating substantial premium flow in the put segment.

This surge in put contracts contrasts with the stock's robust performance, which has outperformed its sector by 3.72% and trades comfortably above all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day. Delivery volumes have also risen by 9.5% against the five-day average, signalling genuine investor participation in the rally rather than a purely speculative move — but what does the put activity reveal about market sentiment?

Strike Price Analysis: Moneyness and Intent

The Rs 410 put strike sits just 2.2% out-of-the-money (OTM) relative to the current price of Rs 419.45, while the Rs 420 strike is effectively at-the-money (ATM). The Rs 400 and Rs 390 strikes are further OTM, at approximately 4.9% and 7% below the underlying price respectively. This distribution of put activity clustered around strikes slightly below the current price is a critical clue to the options market’s intent.

OTM puts bought during a rising market often serve as a hedge against a potential pullback rather than a directional bearish bet. The proximity of the Rs 410 strike to the current price, combined with the stock’s strong upward momentum, suggests that many put buyers may be seeking protection for existing long positions rather than speculating on a sharp decline. Conversely, if these puts were ITM or the stock was falling, the interpretation would lean more towards bearish positioning.

Interpreting the Put Activity: Hedging, Bearishness, or Put Writing?

Put options inherently carry ambiguous signals. The heavy volume at Rs 410 and Rs 400 strikes could represent fresh bearish bets, protective hedges, or put writing strategies. However, the context here favours hedging as the primary explanation. The stock’s rally over the past three days and its position above all key moving averages reduce the likelihood that the put buying is purely speculative bearishness. Instead, investors appear to be safeguarding gains against a possible short-term correction.

Put writing, which involves selling puts to collect premium and implies bullish conviction, is less evident given the open interest (OI) figures. The OI at Rs 410 is 1,055 contracts, significantly lower than the day’s traded volume of 3,629 contracts, indicating that much of the activity is fresh buying rather than unwinding or rolling of existing positions. This fresh positioning aligns more with hedging than put writing, which typically shows higher OI relative to volume.

Still, a minor portion of the activity could be put sellers confident in the stock’s support near Rs 410, but the data does not strongly support this as the dominant strategy — how should investors interpret this mix of signals?

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest is telling. For the Rs 410 strike, the ratio is roughly 3.4:1 (3,629 contracts traded vs 1,055 OI), indicating significant fresh activity. Similar ratios appear at other strikes, such as Rs 400 with 4,463 contracts traded against 1,324 OI. This suggests that traders are actively initiating new positions rather than merely adjusting existing ones.

Such fresh put buying in a rising stock is consistent with protective hedging, where investors purchase puts to limit downside risk without liquidating their holdings. The presence of multiple strikes with high volume also points to a layered hedging approach, covering a range of potential pullback levels.

Cash Market Context: Momentum and Moving Averages

National Aluminium Company Ltd is trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, a technical configuration that signals sustained strength. The stock’s recent 9.84% gain over three days and an intraday high of Rs 419.7 reinforce this bullish momentum.

Delivery volumes have risen to 40.02 lakh shares on 11 August, up 9.5% from the five-day average, indicating genuine investor participation rather than speculative trading. However, the put activity clustered just below the current price suggests investors are mindful of potential short-term volatility or profit-taking — is this a prudent hedge or a sign of caution?

Delivery Volume and Quality of Participation

The increase in delivery volume alongside the stock’s rally points to quality buying interest. This contrasts with scenarios where rallies occur on thin volumes, which often prompt more aggressive hedging. Here, the put buying may reflect a balanced approach: investors are confident in the medium-term outlook but seek protection against near-term dips.

Conclusion: Protective Hedging Dominates Put Activity

The heavy put option activity in National Aluminium Company Ltd ahead of the 25 August expiry, particularly at the Rs 410 and Rs 400 strikes, is best interpreted as protective hedging amid a strong rally. The stock’s position above all major moving averages, rising delivery volumes, and fresh put buying all point to investors seeking to guard gains rather than signalling outright bearish bets.

While some put writing may be present, the volume-to-open interest ratios and strike price distribution do not strongly support this as the primary driver. Instead, the options market appears to be balancing optimism with caution, a common stance in mid-cap stocks experiencing rapid gains.

Given this context, should investors consider similar protective strategies or view the rally as sustainable without hedging?

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year Start at 33% Off →